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The Kudlow Report

News/Business. Larry Kudlow. Larry Kudlow provides his unique perspective on business, politics and investing. New.

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Israel 14, Us 12, Canada 8, Obama 6, Fha 5, United States 5, Seiu 5, Egypt 5, Peter Brooks 4, Kudlow 3, Larry Kudlow 3, John Boehner 3, Jared Bernstein 3, Ms. Henry 3, Lax 3, Ken 2, Jim 2, Rodger 2, Steve Maister 2, L.a. 2,
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  CNBC    The Kudlow Report    News/Business. Larry Kudlow. Larry Kudlow provides his  
   unique perspective on business, politics and investing. New.  

    November 21, 2012
    7:00 - 7:59pm EST  

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i like to say there is always a bull market somewhere. i promise to try to find good evening everyone, i'm larry kudlow. this is the kudlow report. not so fast, everyone. perhaps that was very premature about the fiscal cliff. we still see little or no movement on a deal. president obama might want higher rates and cap on reductions for more tax revenues. that could be a deal-breaker and the markets won't stand for long while nothing gets wrong. i don't want to be overly pessimistic. i'm trying to be realistic. i'm reporting what i'm hearing. but stocks did rise a bit on news after cease-fire between
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israel and whhamas. is israel snaf particularly when we know that palestinians and gaza may just rest unand rearm for the next round? finally as you head out into the thanksgiving traffic, ask yourself where president obama still hasn't given the green light to the keystone pipeline that would give us jobs and energy n independence? now a truly bipartisan group of senators is telling the president to make a decision right now. first up this evening, this is the big question. will we get a deal done or might president obama just let us go right over the fiscal cliff, take the recession, and simply blame the gop? this is a serious question that i'm hearing from washington all the time. so let's talk. we have cnbc contributor jack bernstein, former chief economist, and art laffer, former reagan adviser. i'm not attacking obama or
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anything. i'm just saying there is a lot of talk of stalemate. well perhaps go through where, why and how. staffs have been meeting unsuccessfully. some people are saying, art, that the scenario is going to be that president finally throws up his hands and says there is no deal, we're going to have a stalemate and we will tall off the fiscal cliff into recession and then he will blame the republicans. what's your take? >> i think he's going to blame the republicans, larry, for sure. and i think in the republican's interest to delay it as long as possible and make the republicans look as uncooperative as possible. but we will fall off the cliff anyway, larry. and i think we will have a very bad year in 2013, even if they do extend all of the tax cuts. i think we have a real bad scenario coming forward. >> jared bernstein, what do you think that the president might go off the cliff. okay, nothing on your end. then blame the republicans.
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and add one thing, jared, president obama does have a legacy. seems to me that part of that legacy is, you know, better fiscal position and better economic position. that's why i'm a little skeptical of this scenario but i want your take on it. >> yeah. i share your skepticism, look. if we do go over the cliff, and i sure hope we don't, remember, it is going over and staying over that's recessionary. if there's a real deal that could show markets that we could actually get in a sustainable budget path, even if that deal isn't signed and stamped by december 31, a short trip over the cliff won't hurt us. but here is the thing for you and art to consider. >> i disagree, by the way. >> on thanksgiving eve, here's the thing i want you to consider. repeat after me, guys. tax rates are going to go up on the top 2% of households and it's not going to hurt the economy one bit. >> oh, that part i won't --
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>> it's got to be part of the deal. >> that's part of the deal. >> before you answer that, art, i want to say, a second issue. let's put it right on table since jared opened up. many people believe since the president's budget want $1.6 trillion -- $1.6 trillion, of revenues, over ten years. >> over the next ten years, to be clear. >> next ten years. he will wish to raise the top tax rates. that includes income taxes, cap gains, dividends and estate taxes. and art laffer, he will also wish to curb deductions so he will raise tax revenues as well as tax rates and art, that sets the stage for a stalemate politically. what does it do economically also? >> well, it does set the stage politically. by not doing anything, all the tax rates go up on everyone. that's for sure. so, the question is, the republicans will pass a bill that extends all the tax cuts. i mean, that they will go along
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with no problem. they won't go along with a double wammy and they shouldn't. this is obama's economy. this is obama's issue. if obama wants it pass that in the house, he has it find a group of republicans that will peel off from the rest of the republicans and good along with the democrats it pass this other stuff. but otherwise, i don't see any incentive in the president's part to not extend a large portion of the tax cuts if he can. i don't think he ever wants it see the whole thing go over the cliff. >> i mean, you have to remember that he does -- as you guys have both suggested, he does want to extend a large portion of the tax cuts. that's 98% of them. it's the top 2% of house holds, that not only he, but a majority of the lek electorate and and the polls, and a nonpartisan poll keeper says in the 2013 if the top two rates expire, we are talking about a tenth of a
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percent on gdp. isn't that worth the cost of getting on a bitter budget path, guys? work with me here. >> jared, come on, help me here. these people you are raising taxes on are job creators. this is the worst group you could raise tax rates on. honestly -- >> here is the thing that the -- >> simpson bowls, by the way. >> by the way, they assume the top 2% tax. >> and lowers the rates. >> how do you explain the -- >> simpson bowls would bring down rates. >> better markets, better incomes and with the older tax bracket. >> we are not going to have -- art, you answered it. one of the things that bothers me the most, art, is remember, we have the obama care tax hike. so we have capital gains rising. we have estate taxes rising.
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cost of investment will rise. the return on investment will fall. now, art, through the years, you have taught me that that means less business formation, lower productivity, worst jobs, and lower wages. how can that be a good thing? >> it's not. you can't tax an economy into prosperity, larry. and by the way, did you see what california has done? do you know what after tax rate of return on assets held in california is happened? it just plummeted. that's a very large share of the u.s. economy. we're noncompetitive in the world and we will have a real serious recession in 2013 unless something is really done quickly. >> jared, i just want to ask you a question. >> sure. >> you hinted -- this is really important. where we are going tonight is more politics than economics. >> okay. >> you kind of hinted that we might cross through the year, that we might fall off the cliff. if only for a short period of time. now as someone who worked in there years ago as arthur did,
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short period of time, you will take the better part of the winterer to make a deal. so we are going to go into recession. the question is, do you think the president can take that and do you think he can really blame republicans? is it that easy, or is all hell going to break loose in the country? >> i think it will be absolutely terrible if we go over and stay over the cliff long enough for recession. i don't care who blames whom but i will blame everybody up there. this economy actually has a little bit of momentum behind it and we would be crazy to kill that. obama says they would blame republicans so probably the white house is thinking about that. but if we have a deal by mid january, mid february, i don't see why that is going out of the question at all. they agree with most of what is on paper here. >> one quick thing. >> okay, sure. >> i don't think dividends will go up to 40%. i think there has to be some compromise. >> art, you get the last word. >> let me say, that people already moved a lot of income
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forward. there's income shifting as well as lower growth and that income shifting is going to drop gdp by a percent and half to 2% in the first half of 2013. that's baked into the cake already. >> over a hundred large companies have already brought forward their special dividend payments to avoid that tax hike. anyway, i got a job. jared bernstein, art laffer, have a happy thanksgiving. >> happy thanksgiving, everybody. >> you too, guys. >> well, here is a very interesting idea, carving out small business owners from the deadly fiscal cliff tax hikes. here now to tell us more is maine senator susan collins. as always, whenever you come on this show, you have something really interesting to tell us. i'm reading about this carve-out for small businesses you are kind of looking after. tell us more, how does this work? >> what i wanted to do was to
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try to forth a middle ground that protected small businesses from any of the rate hikes that are being discussed. it seems to me that democrats have been focussing mainly on increasing taxes, republicans were focussing mainly on the need to protect small business. and that there was a way to accomplish a middle ground by allowing for a sir tax on the very wealthy, those making over a million dollars a year. but not applying it to small businesses. many of whom paid taxes through the individual income tax system. >> right. that's a key point. all right, i'm going it leave the sir tax alone. i just want to focus, you basically keep small business top rated 35%, and i wanted to ask you, are there any restrictions. we are talking sub chapter llcs,
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et cetera, et cetera. are there any restrictions to that, or is it just everybody? >> there are restrictions. first of all, it would require that small business actually have employees. that's the whole point is to protect the job creators in our society. second, it would apply to businesses that had up to 500 employees. so we're not talking about very large sub chaptersing corporations so most of them are smaller. and it is really focused on protecting those businesses, such as those that employ between 20 and a hundred employees who are employing 18 million americans. in addition, there's another very important distinction. the protection the carve-out would apply to small businesses whose owners are actively involved in running the
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business, not just passive investors. so that's the kind of business that we're trying to protect. >> those are the job creators, i think, basically you captured most of the job creators. now, i want to circle back just for a second. you mentioned a sir tax on millionaires. do you see a sir tax on millionaires as part of a fiscal cliff compromise, senator? >> i do. i think ultimately that's where we're going to end up. we've got to look at both sides of the ledger. but my concern is that in imposing this kind of sir tax or higher tax on people who make more than a million dollars, that we don't head our small business sector, it is small businesses that are creating the vast majority of new jobs in this country, and sustaining the jobs that we have. and the last thing they need is to be hit with additional taxes.
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so that's the whole concept behind this proposed -- >> i think it is great job protection for the proposers. no one really knows, we don't know if it is stalemate, solution or who, what, when, why. there were bad stories in the paper today that staffs weren't getting along. but when you mention the millionaire sir tax, do you think that's it? ? other words, would the millionaire sir tax cover that and would the john baner idea of putting a limit on tax deducks work also? so have you a revenue but a compromise on tax rates? >> i think that t it would work. and it would give us time to do a complete overhaul of the tax code, which is what i know you've talked about on your show many times. and it really is what is needed. but we're not going to be able to do that before january 2nd, before we go over that fiscal cliff.
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so we need a balanced plan that addresses spending as well. but i think john boehner's proposal plus the proposal i put forth last fall, for the sir tax, but with the carve-out for small business, offers a way forward. and would help prevent us from speeding over that fiscal cliff, which would be a disaster for our economy. >> all right, well, that's it. i think you're rate about that. maine senator, susan collins, can't thank you enough. have a very happy thanksgiving. >> thank you, larry. >> all right. stock markets of course are still obsessed with the fiscal cliff. market did go up today by 48 points on the dow. you know, it is as though nothing else exists. so we're about to talk to a market pro who's going to help you with therapy on this market obsession. speaking of therapy, don't forget, folks, free market capitalism is the best bet to
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prosperity. this whole fiscal cliff issue is tied up with economic freedom and prosperity. i'm larry kudlow, we'll be right back. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ a i'm with scottrade.
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cliff, that's what we need.
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>> hey, washington, even santa claus is calling for a fiscal cliff deal. but it depends on the kind of deal. certainly investors are obsessing over the entire fiscal cliff subject. our next guess will help us with this therapy. welcome back it tjm institutionaler is visions. i want it ask you, let's run the table on this, jimmy. first of all, if there is a stalemate and no year by year end and jared bernstein in the first segment suggested that that might happen. then, does the stock market really start selling off big time, let's say, in december or the last two weeks of the year? what happened? >> i don't know if big time is the right way to describe it. i could see them losing a hundred handles relatively quickly, down to 1250-ish. i think we would see a quick response from the fed. we know where they stand on this. they want to provide liquidity and any time they see a need for
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that. i've never uttered these words before, but santa claus is wrong. we don't want a deal on the fiscal cliff, we want a good deal on the fiscal cliff. >> right. now this is really key. first of all, i want it say one thing, regarding ben bernanke and his monetary safety net and he did say yesterday that he didn't think monetary policy could offset a fiscal cliff recession. i don't want to get into a lot of fed watching. i'm just saying, i'm not sure the federal reserve will do much more. maybe they will, maybe they won't. now regarding good deals versus bad deals, this is where i disagree with some of think kol a colleagues here. maybe you do too. if this is deal that jacks up tax rates, the capital gains rate, dividend rate, if it has a millionaire surtax as senator collins said, that's not such a hot deal. how would they react to a high tax on investor type of deal. >> they limit investments.
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they make investments less attractive. the stock market doesn't want a big raise on capital gains and dividends. the stock market is okay with a small one. the best is the 39% ordinary income tax hike. but essentially leave dividends and capital gains alone with only a tiny bit of increase in that. >> but that is not going to happen, my friend. it's not going to happen. >> this is a grade in scale on the possibility. that's the best side. >> i'm just saying, you're here to give us therapy. >> okay. >> john boehner doesn't want them to. john boehner says let's put a lid on loop holes and raise revenues that way. some people, including myself, believe the president wants it raise revenues by loophole closures but also raise tax rates. wasn't both. if he goes the tax rates, jim, you're talking about capital gains going from 15 to 24, including obama care tax. and you're talking about dividends going 15 to about 44.
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now maybe they will fix that dividend thing. but there is no question that the incentives will roll back by 10 or 15% on those two investment tax rates. no question. >> but if the dividends are fixed, did you say 25% on capital gains, i think the market will learn it live with that. if we can rework the dividend part, the market may think that is positive and think that's a risk -- >> so you might have a shock initially. but then the market will absorb the new tax rates, is that what you are saying? >> that's what i believe, certainly. then you get back into things like apple. if they raise capital gains and dividends and raise dividends up to 40% like on ordinary income, then i see this sluggish recovery, the market will interpret as that, then you run into things like coca-cola, proctor and gamble, things reviewed as safe havens, because we won't have a very good economy. >> if we don't get it done by year-end, good over the cliff, and into first quarter
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recession, art laffer thinks there is recession baked into the cake for first and second quarter. cbo says go over the cliff, we will have recession. that's bad for growth, bad for gdp and bad for profit. you have to expect another correction that might go well into the winter. >> absolutely. they make it out that it is not a big deal if we go over the fiscal cliff. but if there is a tremendous amount of uncertainty, the stock market can sell off and selling begets selling and that's a tremendous danger to wealth. many of them believe it is only up on air at this point, anyway. so i think that's an awful deal. >> we just -- i don't know. i think you got to keep your powder dry right now. i just think you have to wait and see what the reports are, what comes out of press, what spokes people say, we just don't know. but there is no question stocks are obsessing about the fiscal cliff. jim, have a great thanksgiving.
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>> you too, larry. >> thanks for coming on tonight. >> 18,000 lost jobs as hostess goes into liquidation. but the fat cats will not lose any money. wait until you hear the money they are making even as their members suffer. twins. i didn't see them coming.
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before investing. risk includes possible loss of principal. so the bankruptcy court
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approved hostess brands liquidation plan late this afternoon. the firm may still soon several brands but 15,000 workers are being terminated now. while the bakers union and families suffer, the leaders are coming out like financial band its. get this, union president frank hz pay is up and while the union lost 50% of membership. compensation, 45% rise from 182,000 in year 2000 to 262,654 in 2011. and that, according to the department of labor. now, the leaders pensions, they are a hundred percent funded and paid for by the union members. and in addition to the six-figure salaries paid it union's executive staff, both hurts and his secretary treasurer have their kids working at headquarters pulling down over 71,000 and about
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49,000 respectively. i think that's called nepotism. now hostess isn't our only labor problem. but i hope you consider how the leadership hosed over the membership. but today, we've also got the seiu. they went ahead, snarling traffic at los angeles international airport, in the middle of the thanksgiving day rush. but you know what? airport employees say they don't even support the seiu. so what is up with this? we are going to ask the seiu president live a little later, who exactly she's prep accidenting. and a cease-fire in the middle east, but questions still abound. will it hold? did israel get the short end of the stick in my own take, israel should have gone ahead and finished the job of pummeling the hamas terrorists. that's next up on kudlow. [ male announcer ] if you suffer from heartburn 2 or more days a week,
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welcome back to the kudlow report. i'm larry kudlow. in this half hour, how can anyone not be in favor of completing the keystone pipeline. nine democrats and nine republicans want the president to authorize construction right
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now. but alas, we will debate it. the seiu union is snarling $1.79 passengers going through lax this thanksgiving. turns out, the employees they say they represent don't want a thing to do with them. what a story of outside agitators. that's all it is. now a cease-fire between israel and gaza went into feekt today after eight days of heighten et violence. gaza is celebrating when the cease-fire was announced but at least 12 rockets have been fired into israel since the so-called truce. so is this deal bad for israel and good for the terrorists? let's get right to our distinguished guests. former deputy assistant of defense peter brooks and we welcome back wes clark former nato ally commander and fellow senior at ucla berko center.
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a serious question, do you think israel got done what it needed to get done in terms of taking out the hamas military installations and the rocket installations? did they get the job done? >> it is too early to know, but they sure hit a lot of targets in there, and you have to believe that targets were appropriate targets. they were plotted, picked up through various means of intelligence, and they had adequate time to strike them. the question is, did they do enough? we don't know that. the ground campaign remains an option. the troops are still there and as prime minister nettena hugh said, he cannot and will not allow the terrorists to rearm. >> interesting petoint, peter p you say ground war, if hamas doesn't round up the truce, it
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still can happen. >> it can still happen. >> you're the only one saying truce may not happen. now, peter, this is something, a quote from secretary of state hillary clinton today. she is in egypt. she says with president marcy. egypt assumed responsibility and leadership for the peace. peter brooks, i guess i might like it believe that. but with marcy and the muslim brotherhood behind them, they favor hamas. they hate israel. how can he possibly preside over real truce? >> that's a very good question, larry. i mean, president morecy is being tested. we will see if he rises to the occasion. don't forget he has the camp david acords with israel and he gets a lot of aid. egypt gets a lot of aid, economic and military aid for the united states with a peace treaty with israel. if they move away with that, that's in jeopardy. this new president is untested.
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it is a new government. if he is not able to provide for the country of egypt, things may change. he has been put on the spot, and he will have to perform. >> one more spot, peter. his foreign ministry and his morn minister and prime minister have said good things about hamas and bad things about israel. pardon my skepticism. >> yeah, of course, you are right to be skeptical. we've got to see where the rhetoric and deeds match up, don't we? that's what we have to see. i think the general is right. we have to see what happens in the days ahead. earlier today was five rockets. now 12 rockets. israelis have to respond. i mean, this is a cease-fire. the devil is in the details. the negotiating starts now with the cease-fire. the hamas and palestinians want things out of this. so do the israelis. i'm not saying we are out of the woods on this at all and i think we could see more conflict.
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>> a very smart move, larry, to put the egyptians in the position where as president morsi says, he is in charge. okay, he's got to be responsible. no more rhetoric. no more siding with one side. he's got to make the thing work. that's what we want to see as responsible leadership. not id logical leadership. >> that's a great point. let me ask you, something unresolved, in this peace treaty or truce, is the issue of gaza and its borders, which borders up into egypt. now the hamas, they want israel to pull the military out. and have a complete opening of the borders. into egypt. general clark, doesn't that open the door, if that ever happened, to iranians rearming, rearming three egypt, through the sinai, rearming hamas just like they always do. >> of course, and israel can't permit that and shouldn't permit that. this is where egypt has to step up and say, we will insure that
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no weapons get back into gaza. that has to be worked out in stages and demonstrated. it has to be checked and verified. and israel has a continuing interest and should have a continuing right to verify that. >> do you think, general, serious, do you think that hamas, i hope i'm not being too cynical, but hamas in some sense, gained a public relations victory? is that possible? and when you talk about egypt, egypt helped them gain a public relations victory? that kind of burns the back of my neck, general. but that's kind of the way i see it. >> obviously, they are going to say they gained a victory. i think the real loser is the palestinian authority and who has been sidelined by the hamas. a, they wanted to go after the palestinian authority and show they were powerless. they did do that. and secondly, to get egypt to come out and back hamas, which
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egypt hasn't done. so, at best, hamas got a partial victory and egypt has it think about its relationship with the palestinian authority and how to restore balance there. >> peter brooks, last 30 seconds. how does benjamin nettena hugh come out of this? >> i think the bigger question here is the middle east. i mean within you know, step back from what we were just talking about. look at syria. look at issues there. look at spill-over from syria. the administration has to get their arms around this problems in the middle east. and their policies right now are failing. this is just one small section of it. iran's nuclear program, we need a lot of attention on this and it just got's dressed. >> iran is the key point. wes clark, happy thanksgiving. peter brooks, like wise. >> same to you. folks, we know president
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obama loves green energy. but his bets haven't paid off. some senators on his side of the aisle are seeing the light when it come to the keystone pipeline. are they right and will the pressure finally pay off? when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common.
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asking obama to okay the keystone pipeline. so mr. president, what is the hold-up? here is tyson cloak yum, director of energy program at public citizen. and ken green, resident scholar at aei. tyson, i'm stunned to see your notes you haven't come around to the easiest policy position regarding jobs, regarding energy independence. regarding more refineryes. how can you not be wildly in favor of the keystone pipeline? >> because the keystone pipeline has nothing to do with american energy security or lower gas prices for americans. it is all about what is good for canada. it is getting land-locked canadian crude out of alberta
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and to a coast. 75% of the record -- >> canada is an ally? where is that bad? first of all, oil is oil, right? oil is oil. it helps them, it helps us. jobs are jobs. helps them out. but i didn't like your reference to canada. canada is america's greatest ally and friend. we should work together on energy. what in -- what is -- imaginabye what could be bad about working with canada? >> the issue isn't about what is bad working with canada. the question is what is good for american energy security and gas prices. and the keystone pipeline is sending that oil to the gulf coast where it is refined for product outside of the united states. the united states over the last 12 months already exported a record 3 1/2 million barrels of oil and refined product a day. >> that's extremely misleading. >> it isn't. >> they are.
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we cannot use them, that's why we export them. ken green, let me go to you. >> yes. >> this pipeline will get all kinds of gas, all kinds of oil to be refined to the east coast and west coast, which we have learned from the hurricane emergency, we desperately need. and ken, one other point, the head of the afl-cio building trades, has been on here, 220,000 immediate jobs and as much as 500,000 indirect jobs. ken green, how can we not do the keystone pipeline? >> it is a no-brainer. canada is our ally. you don't blockade allies and trading partners when they are trying to get goods into your market when they both benefit from the trade in the market. we have over 2 million miles of pipeline which are operated safely. we can certainly build another one to operate safely. this is the environmentalives trying to bottle up the oil of canadians and americans because
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of their concern of climate change. it is not about cost or export markets or any of that kind of thing. they don't want it say it is about climate change. >> radical environmentalists that hate fossil fuel. come on, tyson. that's your real position. you hate fossil fuel. >> larry, i didn't understand the, understanding the science, makes one a radical. the fact is, there is no question, concerns about the keystone pipeline are all about climate change. the problem i have is when proponent of the keystone pipeline claim erroneously that it is for energy security in the united states and for lower gas pricees. that's false. will the keystone pipeline create jobs? of course it will. i don't dispute facts. but i do dispute the lies that people say when it is going to reduce gas prices. there is nothing about this pipeline project that is about lowering gas prices for american consumers. >> that's a bit after red
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herring. people aren't making lower gas -- >> during the -- they sure were -- >> oilers to refiners for gasoline. >> ken green, i want to ask you about this export issue. my impression is that it is certain distoluates exported. we need it to the gulf to be ex ported to the east and west coast. what is your take on that? >> that is my understanding as well. and the refineries will also capture profit for their investors and their workers, giving them more do t.o. do. it is not as if they work for free for the canadians. they will also profit, as well as those building the pipeline. canada is a share of the world greenhouse gas emissions. the whole country could shut down and it wouldn't change the climate trajectory of the
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future. china and india reafarmed they won't accept greenhouse gas control. greenhouse gas is from canada as a threat to the world is really just bogus. >> we are the least -- last one ken grown, real fast. what about north american energy independence? this changes our security position relative to the middle east. it has to be a good thing. i give you 20 seconds. >> yeah. global trade and energy is good but we are already on the way to north american energy independence between our own growth in oil and gas and ka kan da's export to the united states. we can easily be there in 20 years. at which point north america would be an energy powerhouse exporting energy to around the world to everybody's benefit. >> thank you, gentlemen. tyson and ken. >> have a good thanksgiving. >> this slast thing you want it see on one of the busiest travel days of the year. union workers protesting outside l.a. international airport. are you kidding me? one of the best parts of this story is no one even invited
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them. the very people they think they are representing don't want to be represented by them. and i'm going to ask the president of that union what is up with her thinking. next on kudlow. i don't spend money on gasoline. i am probably going to the gas station about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪ governor of getting it done. you know how to dance... with a deadline. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price.
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does this sound familiar? mortgage loans going to people with bad can credit? buying a home with just 3% down? sounds like what got us into the housing mess to begin with, right? still happening. still happening all thanks to
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the government and now the government will have to bailout yet another housing agency. that's what it looks like. here now is steve maister managing partner at maister selig and fine. welcome back, steve. this is the federal housing administration, right? fha. they are short, you tell me, they are short $56 billion in reserves. that's to me, puts them on the edge. bankruptcy. >> that's right. there's no question as taxpayer bailout coming here. look, the government, obama administration just loves sub prime mortgages. this whole enterprise, this fha, is really a garner to of sub prime mortgages and taxpayers are going to pay big time larry. >> as though we haven't learned anything from $140 billion bailout of fanny and freddy. correct me if i'm wrong, but 40%, roughly, 40% of the loans that they insured just under the
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last year or two, have been sub prime loans. they haven't learned a thing. >> they haven't learned a thing. or maybe they just don't care. but yes, you're absolutely right. 40% sub prime loans. moreover what it is, is people who have gone through one, sometimes two foreclosures, bankruptcies and have razor thin down payments. for some reason, that i cannot possibly fathom, there is this push to quote unquote demock ra advertise credit. what is wrong with renting? why would someone through two foreclosures be put into a new loan. and what is it going to do for that person? look what happened to minorities with the housing crash. >> is the fha deliberately trying to pick up the slack from what is not being done, thankfully any more, by fannie and freddy? that's what i want to know. to me, that's what these guys are doing. >> i think that's absolutely so, larry. and i think what happened is the dirty little secret is the push
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that began in the clinton era with janet reno and agency task force to force banks into making sub prime loans, that's not happening any more. banks are requiring real down payments. now they are just insuring the loans through the outright federal agency, fha. it just goes to prove that they love, just love the sub prime loans and they are making banks pay up, larry. they squeezed a billion dollars out of major banks to help fund the fha's bankruptcy. >> i love this. really, alleged clerical errors more than anything else. and they are trying to shake them down to finance the fha mess. i've owned a bunch of properties down through the years. homes, you know, houses, i've owned apartments and what not. i've always had to pay, at least 20%. and my last question to you is, why don't we restore 20% down payment? >> larry, when i was growing up, as a young man, that's what it was. you went it a bank, it was
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sleepy old time underwriting. 20% down. you had to have enough income and little enough other debts to make a very simple underwriting. that's why housing never went down for 50 years. but when you push sub prime loans and the government forces them to be made, now through a direct agency, the government, of course you will have an asset bubble. maybe another housing bubble. i just don't know # get it. i don't know why we're not just returning to that and leaving well enough alone. it worked for half century. >> you betcha. you betcha, steve maister. thanks for helping us tonight. we switch gears. seiu gears are snarling traffic outside lax. one of the busiest travel days of the year. they are claiming to worepresen workers that don't want anything to do with the seiu. what do they hope to achieve, aside from contributing to major traffic delays? here is the international president of that union, seiu.
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mary kay henry. ms. henry, with all due respect, as i read every single news news article about your operation, you are not only tying up traffic on one of the busiest days of the year regarding airplanes, but you claim to represent employees that don't want anything to do with your union. what's up with that? >> i was proud to stand for jose la bara who worked for stave guard for years today at lax airport. he was ginned by hundreds of fellow coworkers at the airport because we are fighting for good jobs at lax. >> that's not what they are saying. >> that's not what the company is saying. >> the company is saying, frederick mcneil says you bring if outsiders to block traffic and that people in their union have been trying to get out. they are trying to get out of the seiu. you're helping people that don't want your help and it sounds, ms. henry, like you are bringing
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outside agitators. people that don't work at lax, in order to do it. that's what it sounds like. >> no, larry. we are standing up for rebuilding the american middle class. ed with workers that were asked to sign a paper, getting rid of their union, if they received a $5 increase. and the employer withdrew recognition and took away healthcare benefits. we think that is just plain wrong tp it is illegal. we have been trying for a year to unsettle it. the company is unwilling. we went to city hall, the bargaining table. we took this dramatic action today because workers are very concerned about their loved ones that are trying to get healthcare coverage. >> they keep saying they want out of your union and they can get health benefits on their own or, by the way, i suppose go into obama care. which i know you support. >> across the country, workers need a raise --
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>> they don't want your help. ms. henry, you know what you are doing to middle class people? just making their thanksgiving rotten. >> larry, you are repeating an inaccurate statement from the employer. over 50% of these workers support their union. they want good jobs with wages that they can feed their families on. we want to restore middle class jobs at lax. >> then why don't you do it in an orderly way? >> we've been trying for over a year to do that. >> instead of disrupting a big airport like lax on thanksgiving. there are ways to -- >> we tried -- >> even though they disagree with you, they say they don't want your support. >> we have been doing that for a year, larry, and the executive director of this airport, anna marie lindsay, could have handled this situation by stepping in and requiring aviation safeguard to live by the living wage ordinance that guarantees living wage and healthcare for every worker in l.a. that's what we think needs to
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happen for airport workers all across the country. o'hare workers demonstrated. jfk workers were demonstrating today. >> take them to court pch you'ron union is going to be so unpopular as a result of tying up traffic. >> we will stay in the streets until we get justice for airport workers. >> i wish you a happy thanksgiving, even though i absolutely totally disagree with what you are doing. that's it for tonight's show. thanks for watching. happy thanksgiving. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it.
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